CONTRACTUAL COMMITMENTS, CONTINGENCIES, AND OFF-BALANCE SHEET ARRANGEMENTS

In the normal course of business, the Company is subject to various claims and litigation. While the outcome of any claim or litigation is inherently unpredictable, and with the exception of the matter described in the following paragraph, the Company believes that the ultimate resolution of these matters will not, individually or in the aggregate, result in a material impact on its financial condition, results of operations or cash flows.

In March 2010, the Company and International Business Machines Corporation (“IBM”) entered into an Information Technology Services Agreement (the “IT Services Agreement”), under which IBM provides certain aspects of the Company’s information technology infrastructure. Under the IT Services Agreement, IBM provides a broad range of technology services to the Company including supporting its mainframe, midrange, open systems, network and data center operations, as well as providing disaster recovery services. The Company has the option of incorporating additional services into the agreement over time. The migration of the data center processing to IBM was completed in August 2012. The IT Services Agreement would have expired on June 30, 2022. In March 2015, the Company signed a two-year extension to the IT Services Agreement which expires on June 30, 2024. The Company has the right to renew the initial term of the IT Services Agreement for up to one additional 12-month term. Commitments remaining under this agreement at June 30, 2015 are $533.9 million through fiscal year 2024, the final year of the contract. For the fiscal years ended June 30, 2015, 2014 and 2013, the Company recorded expenses of $95.3 million, $95.7 million and $96.3 million, respectively, in the Consolidated Statements of Earnings related to this agreement. The Company capitalized $54.7 million related to the build-out of the IBM data center in Other non-current assets, with $5.1 million, $5.4 million, and $5.9 million amortized into expense in the fiscal years ended June 30, 2015, 2014 and 2013, respectively.

In March 2014, the Company and IBM United Kingdom Limited (“IBM UK”) entered into an Information Technology Services Agreement (the “EU IT Services Agreement”), under which IBM UK provides data center services supporting the Company’s technology outsourcing services for certain clients in Europe and Asia. The EU IT Services Agreement expires in October 2023. The Company has the right to renew the initial term of the EU IT Services Agreement for up to one additional 12-month term or one additional 24-month term. Commitments remaining under this agreement at June 30, 2015 are $41.1 million through fiscal year 2024, the final year of the contract. For the fiscal years ended June 30, 2015 and 2014, the Company recorded expenses of $4.6 million and $1.5 million, respectively, in the Consolidated Statements of Earnings related to this agreement. The Company capitalized $5.6 million related to the build-out of the IBM UK data center in Other non-current assets, with $0.4 million amortized into expense in the fiscal year ended June 30, 2015.

In July 2014, the Company entered into an agreement providing for a capital commitment of $7.5 million to be made by the Company into an equity method investment. During fiscal year 2015, the Company contributed $7.5 million to this investment. In June 2015, the Company entered into an agreement to provide an additional capital commitment of $1.8 million to this investment through December 31, 2015.

The Company has obligations under the IT Services Agreement, the EU IT Services Agreement, and related software maintenance agreements, various facilities and equipment leases, software license agreements, and software/hardware maintenance agreements. The total expenses related to the IT Services Agreement, the EU IT Services Agreement, and related software maintenance agreements were $99.9 million, $97.2 million, and $102.1 million (which includes $5.8 million of expenses related to the agreement with our former data center services provider) in fiscal years 2015, 2014, and 2013, respectively. Total expenses related to facilities and equipment leases were $36.5 million, $39.1 million, and $39.5 million in fiscal years 2015, 2014, and 2013, respectively. Total expenses related to software license agreements were $24.8 million, $25.7 million, and $20.3 million in fiscal years 2015, 2014, and 2013, respectively. Total expenses related to software/hardware maintenance agreements were $48.9 million, $52.4 million, and $49.6 million in fiscal years 2015, 2014, and 2013, respectively.

The minimum commitments under these obligations at June 30, 2015 as follows:



Years Ending June 30,	($ in millions)
2016	$	120.0
2017	98.4
2018	86.8
2019	77.2
2020	72.3
Thereafter	260.9
	$	715.6

In addition to fixed rentals, certain leases require payment of maintenance and real estate taxes and contain escalation provisions based on future adjustments in price indices.

As of June 30, 2015, the Company had an outstanding letter of credit for $1.6 million. This letter of credit was issued in May 2007 to guarantee certain claim payments to a third-party insurance company in the event the Company does not pay its portion of the claims. No amounts were drawn on this letter of credit.

In addition, the Company has obligations under various facilities and equipment leases and software license agreements.

It is not the Company’s business practice to enter into off-balance sheet arrangements. However, the Company is exposed to market risk from changes in foreign currency exchange rates that could impact its financial position, results of operations, and cash flows. The Company manages its exposure to these market risks through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company may use derivative financial instruments as risk management tools and not for trading purposes. The Company was not a party to any derivative financial instruments as of June 30, 2015 and 2014, respectively.

In the normal course of business, the Company also enters into contracts in which it makes representations and warranties that relate to the performance of the Company’s products and services. The Company does not expect any material losses related to such representations and warranties, or collateral arrangements.

Our business process outsourcing and mutual fund processing services are performed by Broadridge Business Process Outsourcing, LLC (“BBPO”), which is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Although BBPO’s FINRA membership agreement allows it to engage in clearing and the retailing of corporate securities in addition to mutual fund retailing on a wire order basis, BBPO does not clear customer transactions, process any retail business or carry customer accounts. As a registered broker-dealer and member of FINRA, BBPO is subject to the Uniform Net Capital Rule 15c3-1 of the Securities Exchange Act of 1934, as amended (“Rule 15c3-1”), which requires BBPO to maintain a minimum net capital amount that is not material to the Company’s financial position. At June 30, 2015, BBPO was in compliance with this capital requirement.

BBPO, as a “Managing Clearing Member” of the Options Clearing Corporation (the “OCC”), is also subject to OCC Rule 309(b) with respect to the business process outsourcing services that it provides to other OCC “Managed Clearing Member” broker-dealers. OCC Rule 309(b) requires that BBPO maintain a minimum net capital amount that is not material to the Company’s financial position. At June 30, 2015, BBPO was in compliance with this capital requirement.

In addition, MG Trust Company, a subsidiary of Matrix (“MG Trust Company”), is a Colorado State non-depository trust company and National Securities Clearing Corporation trust member, whose primary business is to provide cash agent, custodial and directed or non-discretionary trust services to institutional customers. As a result, MG Trust Company is subject to various regulatory capital requirements administered by the Colorado Division of Banking and other state regulators where it does business, as well as the National Securities Clearing Corporation. Specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items, when applicable, must be met, which are not material to the Company’s financial position. At June 30, 2015, MG Trust Company was in compliance with its capital requirements.